SkyWater(SKYT) - 2025 Q4 - Annual Report

Financial Performance - Revenue increased by $99.9 million, or 29%, to $442.1 million for fiscal year 2025, compared to $342.3 million for fiscal year 2024[278]. - Gross profit for fiscal year 2025 was $86.9 million, representing a 25% increase from $69.6 million in fiscal year 2024[277]. - Net income attributable to SkyWater Technology, Inc. was $118.9 million for fiscal year 2025, compared to a net loss of $6.8 million in fiscal year 2024[277]. - Adjusted EBITDA increased by $18.9 million, or 55%, to $53.2 million in fiscal year 2025, primarily due to the addition of Fab 25 and growth in the advanced compute end market[291]. - Net income attributable to SkyWater Technology increased by $125.7 million, from a loss of $6.8 million in fiscal year 2024 to a profit of $118.9 million in fiscal year 2025[290]. - Adjusted EBITDA for the fiscal year ended December 28, 2025, was $53,163, compared to $34,281 for the previous year[368]. - The company recorded net income attributable to SkyWater Technology, Inc. of $118,910 for the fiscal year ended December 28, 2025, compared to a loss of $6,793 the previous year[368]. Revenue Sources - Advanced Technology Services (ATS) development revenue decreased by $26.1 million, or 11%, primarily due to a $41.8 million reduction in aerospace and defense market revenue[279]. - Tools revenue decreased by $47.9 million, or 62%, from $76.8 million in fiscal year 2024 to $28.9 million in fiscal year 2025[280]. - SkyWater Texas Wafer services revenue increased by $175.3 million due to the Fab 25 acquisition, with $17.9 million representing non-cash revenue from the Supply Agreement[282]. - Legacy SkyWater revenue decreased by $75.4 million, or 22%, from $342.3 million in fiscal year 2024 to $266.8 million in fiscal year 2025[293]. - The SkyWater Texas segment generated $175.3 million in revenue for fiscal year 2025, with a gross profit of $40.0 million and a net income of $137.7 million[299][301]. Acquisition and Investments - The total purchase consideration for the Fab 25 acquisition was $206.5 million, including a $120.0 million fair value of the off-market component of the Supply Agreement[273]. - A bargain purchase gain of $111.7 million was recognized in conjunction with the Fab 25 acquisition, reflecting the excess value of net assets acquired[288]. - The company entered into a definitive agreement to be acquired by IonQ, expected to close in the second or third quarter of 2026[270]. - The company submitted an application for funding through the CHIPS and Science Act for modernization and equipment upgrades, with a potential of up to $16 million in funding[273]. - Net cash used in investing activities increased to $113.0 million in fiscal year 2025, reflecting investments in Fab 25 and manufacturing capabilities[312]. Expenses and Liabilities - Cost of revenue rose by $82.6 million, or 30%, in fiscal year 2025, primarily due to $135.3 million higher cost of sales from the inclusion of Fab 25 operations[283]. - Selling, general and administrative expenses increased by $26.9 million, or 56%, in fiscal year 2025 compared to fiscal year 2024, primarily due to costs related to the Fab 25 acquisition and one-time transaction costs[286]. - Interest expense rose by $4.9 million, or 55%, from $8.8 million in fiscal year 2024 to $13.7 million in fiscal year 2025, driven by increased borrowing for the Fab 25 acquisition[287]. - The Company incurred $10.1 million in debt issuance costs related to the Amended Loan Agreement, amortized as additional interest expense[318]. Cash Flow and Financing - Net cash used in operating activities was $28.9 million in fiscal year 2025, a decrease of $47.5 million from $18.5 million of net cash provided in fiscal year 2024[311]. - The Company entered into an Amended Loan Agreement increasing borrowing capacity from $130 million to $350 million, with a maturity date extended to June 30, 2030[316][317]. - The Amended Loan Agreement allows for unfunded capital expenditures to increase from $15 million to $44 million for 2025, enhancing liquidity[317]. - As of December 28, 2025, the Company had borrowings of $195.5 million and availability of $55.7 million under the Revolver[318]. - The outstanding balance of the company's Revolver was $195.5 million as of December 28, 2025, with a variable interest rate of 8.2%[372]. Tax and Regulatory Matters - The income tax benefit for fiscal year 2025 was $28.0 million, a significant increase from an expense of $0.2 million in fiscal year 2024, due to the realization of deferred tax assets from the Fab 25 acquisition[289]. - The company recognized a non-recurring tax benefit of $23,200 for the year ended December 28, 2025, primarily due to taxable temporary differences from the Fab 25 acquisition[355]. - Future tax rate changes could materially affect recorded deferred tax assets and liabilities[357]. Risk Management - Market risk exposure is primarily related to potential changes in the fair value of debt due to fluctuations in market interest rates[370]. - A 100 basis point increase in the interest rate would result in an additional annual interest expense of $2.0 million based on the current outstanding balance[372]. - Ongoing credit evaluations are performed regarding the financial condition of customers related to trade receivables[371]. - The assessment for the allowance for credit losses is based on historical write-offs, recoveries, and current and future economic conditions[371].